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Dissolution of firm Amalgamation of firm Conversion of firm Absorption ofcompanies

Amalgamation ofcompanies

1. Realization Accounta. Closing asset a/c (6points) b. Closing liabilities a/c (3

points)c. Realization on asset a/c (2

points)d. Payment of liabilities a/c

(2 points)e. Payment of realization

expenses a/c (4 points)f. Closing of realization a/c

(2)2. Capital account ( balance

of P & L a/c, reserve &fund, profit & loss onrealization )

3. Distribution of balancecapital

Solvent Solvent and insolvent Insolvent (three

methods)4. Cash a/c: distribution

of cash

Other points Goodwill account Profit or loss on

sale of assets Profit or loss in

payment ofliabilities

Distribution of

A. In the books ofamalgamating firms1. Revaluation

account2. Closure of the old

accounts book3. Transfer of the

accumulated reserves,profits and losses

4. Unrecorded assets5. Unrecorded liabilities6. Close the accounts of

assets & liabilitiestaken over by the newfirm

7. Close the accounts ofpartners capitalaccount and new firmsaccount

B. In the books of new firma. For closing the

accounts of assets andliabilities taken away by the new firm

A. In the books of firm1. Realization Account

a. Closing asset account (3) b. Closing liabilities a/cc. Purchase price due to

vendord. Realization of asset a/c (2

points)e. Unrecorded assets a/c (2)f. Payment of liabilities a/c

(2)g. Unrecorded liabilities (2)h. Payment of realization

expenses (firm)i. Closing of realization a/c

(2)2. Capital account ( balance

of P & L a/c, reserve & fund,profit & loss on realization )

3. Payment of thepurchase price

4. Distribution of sharesand debentures

5. Balance of cash a/c

B. In the book of purchasing company

1. Taking over the assets andliabilities by thepurchasing company

2. Payment of the purchaseprice

A. In the books of firm

1. Realization a/ca. Closing asset a/c

(4) b. Closing liabilities

a/cc. Purchase price

due to vendord. Asset not taken

over (3)e. Liabilities not

taken over (3)f. Redemption of

debentures &preferenceshares (4)

g. Payment of windup expenses (5)

h. Provision of badand doubtfuldebts

i. Closing ofrealizationaccounts (2)

2. Shareholderaccount

3. Payment ofpurchase price

4. Distribution ofshares of thepurchasingcompany

5. Transfer of

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assets realizedgradually

Proportionate capitalmethod

Maximumloss method

capital6. Balance of cash

a/c

B. In the books of purchasingcompany

a. For purchasing the business

b. Giving away theassets andliabilities by the vendor company(3)

c. Payment of thepurchase price to vendor company

d. Payment of windup expenses by thepurchasingcompany

e. Adjustment ofgoodwill tosecurity premiuma/c